Tata Comm to sell African subsidiary Neotel for $428 mn

Tata Communications has sold its majority stake in South African Internet-service provider Neotel Pty Ltd to telecommunications firm Econet Wireless Global for USD 293 million (about Rs 1,992 crore).
Liquid Telecom, majority owned by Econet Wireless Global, entered into an agreement to acquire Neotel, the company said in a statement.
It will pay Tata Communications and minority shareholders led Nexus Connexion 6.55 billion rand (USD 428 million) to create the continent's largest broadband network and business-to-business telecommunications service.
Tata Communications had acquired 68.5 per cent controlling stake in Neotel in 2009.
"Liquid Telecom is partnering with Royal Bafokeng Holdings (RBH), a South African empowerment investment group, which has committed to take a 30 per cent equity stake in Neotel," it said.

The acquisition will provide South African businessman Strive Masiyiwa-founded company wireless spectrum and broadband access. His Econet Wireless controls Africa-focused Internet provider Liquid Telecom and mobile-phone company Econet Wireless Zimbabwe Ltd.

The deal comes four months after a 7 billions rand proposal of Johannesburg-based Vodacom Group Ltd to buy Neotel fell after almost two years of regulatory battles and legal opposition to the deal by competitors.
"The shareholders of Neotel - Tata Communications of India and minority shareholders led by Nexus Connexion - have agreed for Liquid Telecom to acquire Neotel for ZAR 6.55 billion," a statement by Liquid Telecom, Tata Communications and other stakeholders involved in the deal said.

The transaction, if approved by stakeholders of companies involved and regulatory authorities, will create the largest pan-African broadband network and business-to-business telecommunications service provider, it said.
Through a single access point, businesses across Africa will be able to access Liquid Africa's 24,000-km of cross- border, metro and access fibre networks, spanning across 12 countries from South Africa to Kenya, with further expansion planned.
"We are excited about this transaction. We will also be increasing investments into Neotel to cater for rapidly accelerating mobile and enterprise traffic, enabling us to launch exciting new products and services," Nic Rudnick, Liquid Telecom CEO, said.

Tata Communications Managing Director and CEO Vinod Kumar said: "Liquid Telecom is the right partner for the next phase of Neotel's evolution. We believe that Liquid Telecom will deliver on the vision of a well-connected Africa, which will augur well for the South African telecom industry and Neotel's customers."
The transaction is subject to approval by South African regulatory authorities and is expected to be completed later this financial year, the statement said.